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Market Analysis of Sustainable Financing for Agriculture in Brazil
06/27/2021 Since 3 months

The Brazilian green bond market has grown exponentially since 2015, from 0.6 to 9 billion dollars. Over the past two years, other labeled bonds, such as social, sustainable, sustainability-linked bonds, and transition bonds have also come to the market. The land use category continues as the second most funded in Brazil across these sustainability-themed debt. The Climate Bond Initiative (CBI) with the support of Gordon and the Betty Moore Foundation, produced a report that covers issuances from May 2015 to February 2021 under the green, sustainable, sustainability-linked and transition thematic labels.

Green bonds continue to dominate the Brazilian market, representing 84% of the country’s sustainable debt market. Renewable energy and Land use remain the two most funded categories, with 45% and 27% of the volume of emissions. Sustainable bonds represent 15% of the Brazilian market for labeled bonds, with USD 1,600 million; being those related to Land Use which represent the majority of transactions (33%), followed by those related to Water resources (25%). Land Use Change category covers agriculture and livestock production and forestry.

Some measures that can expand the scale of the Brazilian market for sustainable agricultural bonds include:
• Disclosure of the eligibility criteria for sustainable agriculture
• Detailed transition pathways
• Building investor demand for agriculture
• Leveraging key policy developments
• Prioritising of agriculture within sovereign bonds

The land use sector has an important role in Brazil’s sustainable finance market, and thematic labels from issuers across all agricultural themes has the potential to increase and place the country on the map as the largest sustainable agriculture bond market.

This post is also available in: Spanish

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